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SSP in the eye of the storm

The airport and railway concessions operator raised £216m in March
June 1, 2020

SSP’s (SSPG) half-year results arrive belatedly on Wednesday 3 June, having been delayed from their original 13 May release date - the airport and railway food and beverage concession operator wanted more time to incorporate the present economic mess in its announcement. Given that its half-year runs to 31 March, and that global travel restrictions were mostly in place for a fleeting part of this period, we’ve not been led to expect a massive coronavirus blow to its interim figures. SSP’s Asia-Pacific business, which accounts for around 8 per cent of its turnover, did incur some pain during February, owing to a sharp decline in passenger numbers. SSP expects its overall half-year revenues to drop by 3 per cent on a constant currency basis.

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Air passenger travel has ground to a halt in many of its key markets, while a significant proportion of the general public is either shunning trains in favour of other modes of travel, or have been forced to work from home. Its worst-case scenario has modelled a second-half revenue drop of 80 to 85 per cent. Factset consensus estimates forecast sales of £2.05bn, which would represent a 27 per cent year-on-year slump. But the strength of the group’s liquidity is of more pressing importance and is likely to dictate its share price movement come Wednesday. 

SSP raised £216m via a share placing in March and has also accessed Bank of England financing. It took actions that it said in April will “provide sufficient liquidity to enable SSP to operate throughout even its most pessimistic trading scenario” (which is mentioned above). These measures included the delay of a £26.7m outlay on final dividends, and SPP has asked shareholders to waive their right to this payment, which is due 4 June. 

The uptake on this request isn’t clear yet. SSP has already had to row back on direct shareholder returns, cancelling a £100m share buyback programme launched in November that followed a £201m outlay on dividends that included £150m in special dividends.